Let the market choose winners

Electronics distributors have recently taken one of two paths. Either they charge a fee for extra services, such as kitting parts, programming devices, and providing just-in-time delivery, or they include the costs of those services in their prices. Distributors Avnet (Phoenix, AZ) and Arrow (Melville, NY) follow the "fee" trail, while Future Electronics (Montreal, QC, Canada) has taken the "no-fee" path.

These distributors have not asked for protection from each other, nor have they asked for any special favors from the government to protect their businesses in case they stumble. Ultimately, buyers alone will decide which approach gives them the most value for the money and, thus, which businesses survive. Who knows? The distribution market may have room for both approaches.

Unfortunately, not all businesses see the wisdom of letting the market—that is, the customer—decide what's best. Recently, under political pressure, President Bush placed import tariffs of up to 30% on certain steel products. US steel makers had whined for "protection" from cheap imported steel, claiming that foreign producers would undercut US prices and force domestic steel makers out of business.

What a difference a few months make. Prices for steel have increased rapidly, some more than 50% according to Purchasing magazine. And The Economist reports that stock prices of companies such as US Steel and AK Steel have nearly doubled (May 25, p. 62). The steel companies that seemed on death's doorstep now run profitable operations. The tariffs may have played a role, but it's more likely economic principles such as supply and demand played a bigger part. Bush should have let the steel industry take its lumps through tough times and collect its profits during times of plenty.

The role of the market's hidden hand struck close to home for T&MW in June. Economic conditions forced us to cease publication of our sister magazine, Test & Measurement Europe, which we had published for over eight years. It became impossible to continue publishing a free magazine that contained only a few ads. So, we accepted the market's verdict with reluctance and decided to reach test-and-measurement professionals in Europe via an e-newsletter. Hopefully, we'll learn from these experiences.

But instead of worrying about the possible demise of a company or product, we're better off giving a venture our best efforts and working to make it a success rather than relying on others for protection. Even the fickle market respects excellence—as long as it doesn't cost too much.